baldwin who picks it up for cnn newsroom. hi, brooke. >> hi there. i'm brooke baldwin. a special hour ahead. welcome to all of you in the united states and our viewers all around the world as we await the closing bell on wall street. checking the clock here. we are now less than 60 minutes away from that, and i am joined this hour by two of my colleagues. first, we have ali velshi standing by for me in new york and richard quest in london. gentlemen, good to have both of you on. ali, to you, thoughts as we watch this day tick down. >> things look like they have stabilized with an hour to go and we stabilized more than 4% lower, and you and i have done this enough time in the last few weeks to know, brooke, anything can happen in the last hour. let me tell you what happened. started off. it was a rough day. we had news that growth in europe, as we have expected, is -- is slow. then we got a report out from morgan stanley, probably the first of many that we're going to get, again, saying something that we knew, that growth is slowing worldwide, that the chance of a double dip or another recession is increasing and that the -- that the

europeans and the americans might have to have more central bank intervention into the markets and also said that there have been policy decisions in europe and the united states that have been poor, and then on top of that, that was enough. that was already bad, brooke. then we got some economic reports right here in the united states. slowdown in housing, slowdown in manufacturing, and, you know, not a great report about new jobless claims. basically it all piled on. people ran out of stocks and back into -- into, you know, safer investments, but, really, it all started in europe. let's go there, richard quest. tell us what you did. >> we had a pretty awful day on the european markets. the dax in germany, main index in germany was off by 6%. by the close, all the major european markets down 4%, 4.5% and 5%. and the real reason, very much following on your theme, having had fear, worry and concern. now there are facts, and they may not be very strong facts,

but as we will show you in this hour growth is slow, sluggish and not likely to get any better, and that, brooke, is the reason why today people decided to head for the door. >> richard quest, ali velshi, we will continue this conversation through the hour. a couple of days of stability and then, wham, uncertainty, fear back again in the marks. gentlemen, stand by. i want to start this hour in new york. let's get right to alison kosik at the new york stock exchange. ali mepged the multitude of factors, perhaps the trigger point here. you have the european markets are down. you had this report from morgan stanley and then, you know, worrisome numbers. these reports in the u.s. and that equals fear. >> reporter: oh, yeah, it does, and fear is a big part of this selloff. you know, one trader i talked with earlier today. he said, you know what? give me a reason not to sell. all of the reasons point to selling at this point until we hear some good news, especially since we've gotten new things to worry about today, more signs of economic weak ney. we've got the jobless claims,

back above $400,000. home sales are down. inflation rose. also, a closely watched index of manufacturing activity, that plunged into negative territory. that shows that manufacturing in this regional index is contracting, and one economist that we spoke with said it's never been that low without triggering a recession, and then, of course, morgan stanley warning that the u.s. and europe are hovering dangerously close to a recession, so what that does is it joins sort of the chorus of others who have been lowering their estimates for growth rates, who have been increasing the odds of a possible recession, and that obviously is not reacting well here on wall street. >> yeah. we're looking at the dow jones industrial average, down 488 points, as we mentioned, less than 60 minutes away from that closing bell. alison kosik, printed out that morgan stanley report and it's interesting how they say we could be dangerously close to recession both in the united states and globally, and i want to point specifically, they say, the main reasons for the growth downgrade, apart from disappointing incoming data are

recent policy errors, policy errors both in the u.s., they say, and in europe. >> reporter: right, exactly. i mean, it's the same reason why we saw the selloff after standard & poor's downgraded the u.s. debt. it's because of -- of policy-makers dragging their feet. you know, there's still a lot of uncertainty as to what's going to happen, and what you see is wall street sort of pricing in the possibility of a recession because, you know, if they say -- if they, meaning morgan stanley, says that we are getting closer to the possibility of a recession, investors are taking a step back saying we're looking at our stocks, and you know what, looking a little bit too high in that kind of environment. >> thanks. check back in with you later. ali velshi, can't compare this to what we saw in 2008 in the u.s., because unlike that time this is not economic. this is political. >> reporter: yeah, and it's political on two different levels. in europe they have some real structural problems. here in the united states we've got political problems. you'll hear over and over

experts saying that a lot of the problems we're facing right now can be solved almost overnight if we wanted to. we have the data and we know what decisions can be made. we're not politically taking them. i want to take this conversation out to somebody who knows a lot about them, bill gross, the founder of pimco. bill, richard and brooke might get in on this conversation with us, but i guess what we need to know here is you don't really depend on morgan stanley to put out a report to say something that you have been saying and that a lot of people understand, but give me some sense. you tweeted out earlier that you think a recession is probably inevitable at this point? >> well, we do think so, ali. you know, perhaps not in the next month or two, but certainly towards the end of 2011, and it comes down to what you've been talking about, a lack of policy options, not just from the standpoint of washington and fiscal policy and the -- and the intractability of the gang of 12 perhaps or the debt ceiling

results, but also in terms of monetary policy. it appears to us that the fed might be out of bullets, that, yes, a possibility for a qe3 but yields are already so low that it seems to us the ability to stimulate the economy from this point forward is definitely -- >> that's a good question, bill. the ten-year today is -- at one point yielded less than 2%. the u.s. government can borrow money for ten years at a rate under 2%. meanwhile, the fed has said it will keep interest rates low until 2013, and this morgan stanley report, as many people say, may see the need for further intervention by the european central bank and by the fed. what exactly could that possibly mean? who can come to the rescue? who is the white knight here that could help us get our economy out of the doldrums? >> well, we agree we're running out of white knights. in euroland the ecb, the central bank itself there is conflicted in terms of whether or not to

keep on writing checks for greece and for portugal and for ireland. in addition, france and germany have come together and basically said that they are united in their belief that fiscal policy must be conphysical try to some extent. they must balance their budgets in italy. they must balance their budgets in the core of euroland and that's a fiscal contraction basically that takes money out of an economy. >> that's a problem, bill, because, you know, we've got richard here in london where they have seen, in britain they have seen the austerity programs go into effect. the fact is who is going to spend, if moab is spending, if consumers haven't stepped up even though savings rates have increased, companies aren't expanding even though we know they have got cash and then you've got the opposite of stimulus, you've got countries spending less, what is that a recipe for? what is that outcome look like to our viewers? >> well, it's a recipe for a mild recession, not necessarily

a significant one. it speaks to what economists call a liquidity trap meaning businesses are waiting for a consumer demand and they are waiting for businesses to higher so it goes starnd in a circle, winding down and down much like watering a bathtub. back in the 1920s, henry ford basically decided to pay workers $5 an hour so that they could buy fords. now it's just the reverse. as you mentioned, corporations are raising cash, not hiring labor, so the ability of consumers to consume is fairly limited. >> let me ask you this. there are a lot of people in america that say we're in a bifurcated economy. jobs are hard to come by, credit is hard to come by. what -- what -- tell me what difference it would make if we went into a recession again. >> well, it wouldn't make a

difference to wall street. up until this point they have been able to bore oh, this money cheap an and reinvest it. now if the economy stalls and goes down to the zero line or perhaps below that, that basically means corporate profits go down as well so the ability of a financial market or a lefrd finance year, so to speak, to make money off of -- cheap money is becoming severely limited so wall street joins main street in the debacle. >> so the idea we would depend on wall street and those corporations to spend the money, thanks for your input today. bill gross of pimco. >> richard? >> when we come back in a moment, we talk a great deal about those gdp numbers. how bad are the numbers, and why should we be every time a local business opens its doors

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welcome back to our coverage of the markets as they are falling and falling all day. this is the dow jones industrials at the moment, down 469 points or off just 4%. we've bobbed up and down throughout the course of the session, around the 11,000 and now basically underneath it with just 45 minutes or so. we've talked so much about this question of gdp. i want to show you exactly what this means. gdp, of course, gross domestic product in the second three months of this year and how the totality of these economies are

performing. let's start in the united states. in the second quarter of this year, the united states grew by just 0.3 of 1%. that we can describe as growing pains coming off some fairly okay numbers before that. so the u.s. is growing quite not brilliantly, woringly, but look at these european countries, the eurozone, up to 0.2% of 1%. germany growing which 0.1 of 1%. that's virtually nothing. it's stalled. europe's largest economy out on its knees, and as for france, well, the french economy completely stagnant, no growth at all, and this is why -- this is exactly why morgan stanley says transtlantically the risk of a recession has increased, and you'll see this very clearly with one of the major markets in europe, the german market which was very sharply higher, and then look at how it has fallen right the way down, a drop of

some 25%. that's the german market. all right. we need to talk about where economics and markets all come together. stevon moore is the senior economy writer with the "wall street journal" and joins me now. i've just sketched out what is by any definition a truly awful economic picture. >> well, it could be more awful. it could be negative, but you're right. these numbers are really disturbing, and the problem is the direction is downward in all of these countries. often, in the united states the fear is that the kind of virus that's hit the european market and the european economy with respect to jobs is now going to move overseas and and if i ent united states, and we're already seeing signs with that with what already happened with the dow today. >> right. so in this environment, the one thing i'm hearing from investors

is they have no confidence right now in policy-makers. >> right. >> are policy-makers simply negligent or incompetent or this is simply beyond them, both in the u.s. and treasury and fed and in europe with the ecb? >> well, let me talk about the united states which i'm must more of an expert on. the president this week when he was on his -- what they are calling the magical misery tour around the midwest basically said this week that, you know, he was a victim of bad luck and that the economy is really rotten because of factors beyond his control, and i -- i do think that there is a loss of confidence in the united states among business leaders and among investors in president obama's ability to lead this economy after 30 months. things haven't gotten much better. we still have, you know, 9% unemployment in the united states, and it's almost every time he opens his mouth the stock market drops. >> all right then, but what about when rick perry opens his mouth? >> right. >> and then decides to say it's treesnous and treacherous.

>> right. >> now look, whatever his political opinion, and that's entirely up to him, does it help us in a bad situation? >> well, first of all, i agree with you that the terms that rick perry used to describe ben bernanke and the fed were over the top, and in fact in our editorial in the "wall street journal" today we said just that, that, you know, treachery and treason is just simply not what you want a presidential candidate to be saying about the fed, but i do agree with him that there is a mentality in washington and on wall street that is misguided, that the way to get out of this recession is to print money, and the point that we made, and i think a lot of americans agree with this, you can't create jobs by printing money and that's what the fed has been trying to do for the last three years. by the way, i want to say one other thing. the gold price going up, i mean, that's the other big story today. >> yeah. >> is that the gold price, what is, latest, 1,850 or something like that, the reason the gold price and commodity prices are rising is people are losing

confidence in paper currenties. >> let me ask you something, if i can, just want to get in with -- >> hey, ali. >> good to see you again. >> yeah. >> the fact is, whether it's morgan stanley, can you choose to believe them or not, but a lot of people are saying that the concept of qe3, another round of quantitative easing, may be the best solution. you -- you often are in contact with and represent a conservative view in the united states. >> right. >> where do you stand on that idea? >> i'm against it. i don't think it's worked very well. here's one of the problems, ali, with the american economy. it's not just jobs. if you look at the income statistics for family incomes, look, you and i both care about what's happening to middle class families, the problem is we're not seeing income growth among people who do have jobs, and i do believe one of the reasons for that is what have middle class families faced in the last couple of years, higher gasoline prices, higher fuel prices, higher food prices, i think that's a result of this very loose, zero monetary -- zero interest rate policy and ali,

we've been doing this now for what, two years with near zero interest rate and it hasn't really pumped up the economy. >> some say it saved us from a depression. that's a matter of discussion. >> some do say that. >> all right. >> i just disagree. >> senior economy writer, stephen moore. good to have your forthright robust views from the "wall street journal." >> great to be with you. >> thank you for a good discussion. brooke is in atlanta. brooke? >> hey, richard, thank you so. keep that bell on standby. steel a phrase from you, 40 minutes away from the end of play today, and we know what fears of this double dip recession mean for wall street. what does it mean for you? also might there be a silver lining and good news in terms of buying a home in the united states? got poppy can i have some ice cream, please ? no, it's just for new people. hey ! chocolate, vanilla or strawberry ? chocolate ! chocolate it is ! yeah, but i'm new, too.

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welcome back here to cnn. breaking new as we continue to keep a very close eye on the market. the dow jones industrial average down 478 points. sitting right around 10,931. all three indices down today. it has been down in terms of the markets overall globally. you know, there are a lot of factors at play here today. i want to break some of them down and get into the details of what this means for you. i want to bring in cnnmoney.com poppy harlow in new york. poppy, let's begin with this report out from morgan stanley because there are two headlines. >> right. >> we know they are slashing its global growth outlook, not just for this year but for next year, but the big headline gaining a lot of traction, the headline here, that we're dangerously close to recession, both in the u.s. and europe. >> yeah. >> what do they base that upon? >> reporter: well, that's what shocked investors. they base it had upon growth

projections so let's go to those numbers first. what morgan stanley did, they came out with this that we all have, they said they project the growth of the u.s. economy in 2011 this year and in 2012 is going to be pretty significantly slower than they expected and then off of that they say that at this point, not only the u.s. but europe, both are ding rousely close to hovering close to a recession. technically what a recession means is two quarters where this -- that our economy doesn't grow, where there's actually a move backwards, if you will. however, i want to qualify this, because what they also said on the front page of this report, brooke, is that they said that this is not going to be as bad as 2008. >> yes. >> reporter: even if we fall into a recession, it's not the same thing. the economy is not in peril in the same way it was, even though the markets, you may think that. this is coupled with, as you've been reporting all day, a number of bad reports, the worst manufacturing report we've had arguably since march 2009 in the middle of the recession, much

worse than expected housing numbers and a jobs number that was worse than expected this morning so it's not just what morgan stanley said, but that certainly sent shivers through the market this morning after europe had a big selloff overnight. >> a lot of people also, you know, pulling their money out of the markets, putting them in treasuries. how are treasuries, u.s. treasuries faring today? >> reporter: yes. this is so interesting. if you look at the yield on a ten-year treasury that a lot of folks watching may be invested in, what they consider a safe haven, the prices have gone even higher today as market has fallen, and the yield, brooke, has fallen to a record low, below 2% for the first time in history. 1.99%. that's what you're getting on ten-year treasuries right now, and that is one thing and one thing only that investors, despite the problems in our economy, feel that u.s. debt is a safer place for their money than the stock market, than european debt, than other places, so they are running into this, despite not making a lot of money off of it. that's exactly the thing we saw last week in the big selloff. >> and at least if you are in

the market to buy a house, they are a little bit more affordable as we're looking here. mortgage rates, they are down. >> reporter: yes. >> a record low there. poppy harlow, thank you very much, cnnmoney.com. ali velshi, to you, sir. >> not only, you just pointed out, mortgage rates are low. home prices are low. in fact, coming back we're going to talk to rick newman, the chief business correspondent at "u.s. news & world report." he says, you know, for all the bellyaching out there, things are actually healing. there are some good signs in this economy, and we should probably listen to a few of them. he's going to tell us what they are when we come back.

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to do this right. watching special coverage here on cnn. brooke baldwin always here and has been covering this for a long time. almost more of a veteran of this than richard and i are. >> hardly, hardly. >> we bring in our friend richard quest in london as well, because, a, this is a global phenomenon, and, b, lots of people think that europe caused this problem anyway so he's here to be accountable. want to bring in rick newman. let's talk with rick. you talked with poppy and talked about some things going on that are not terrible. let's talk about some things not going wrong right now. want to put this on the screen just to give you a sense of what it is. number one, stocks are cheap, and i put a maybe around that, because some people think they are priced maybe where they should be. you just talked, brooke, to poppy about record low mortgage rates, home prices low, home

affordability and oil prices are down again, lower gas prices than we were several months ago. gold at a new record, for those of you with gold fillings and gold necklaces and things like that, and unlike 2008, rick, we do not have a credit freeze. there is enough on that screen to make some kind of an economic cake. >> well, that's good news for somebody. certainly not glossy about the economy. all these problems are totally real and we could be in another recession right now, but there's a lot of reason to think that it won't be as bad as last time, and it may not even be a recession. companies are in terrific shape. >> right. >> in 2008 -- >> 2007 and 2008 people didn't have cash. they weren't spending as much. >> that's right. >> and companies were borrowing. >> that's right. everybody, companies, and individuals and families have gone through a massive readjustment process over the last three year, buying less and saving more. people get it. you've got to pay down debt. we're sort of getting through that process right now. we're not far enough through that process, but we're -- many, many families and businesses are in way better shape. companies have laid off so many people and can barely lay off

anybody else and keep the doors open. if we enter another recession, unlikely we'll see layoffs like the last time an what's happening now in the markets i think is investors are basically readjusting to the likelihood of a recession. that's why we're just seeing the ambient level of stocks come down. let's say that doesn't happen. let's say washington does get its act together and comes up with a plan that helps the economy instead of harming it. that would be an upside surprise that would have investors saying, wow, maybe stocks are cheap and i should start buying. >> i want you to say this to richard quest because the difference between the u.s. and europe right now, both of which are suffering from stagnating sort of economies. >> yeah. >> is that in the united states the answer to so many of our problems is political. we can actually fix medicare, social security, the debt, all sorts of things. we can't create jobs instantly, but we can solve most of these things if the political will is there to do it whereas in europe it's much more structural. >> this government that

everybody suddenly hates in america is actually structured in a way that it can address these problems head-on. we're just lacking the will to do it in washington. in europe, it is a total mess. americans -- i don't know if people will be heartened to hear this, but the structure in europe makes the u.s. government look terrific. they have no treasury secretary. >> is richard in here for this one, richard and brooke, do you hear what he said, he said the structure here in europe makes the u.s. look terrific. answer for yourself, sir. >> i've -- i've got a question for you, sir. all right. assuming that you are right and there's a dysfunctionality in europe, you would surely then agree that it's not that much better in the u.s. remember, the debt ceiling debacle. do you not actually think it doesn't really matter because in this global economy if we're going, you're going, too? >> i -- i am going to disagree with you there, richard. i think there's dysfunction all around. i mean, that seems to be self-evident, but we don't have to fix structural problems with

our government here in the united states in order to address the problem. all we have to do is take plan, a, b, c, doe off the shelf and execute it. in europe, the mechanism doesn't even really exist for having sort of a single authority over the 17 countries in the eurozone or things like that. you have no treasury secretary, as we have here. you've got 17 finance ministers who all have to agree. i mean, it is so hard, i mean, that's like having the 50 states trying to organize a bailout of a few states without any central authority. >> hang on a second, gentlemen, let me jump in, because you hear the phrase, if europe has a cold, the u.s. sneezes. we are absolutely all interconnected. maybe i'm siding with mr. quest on this. i mean, we absolutely have to pay attention in the united states as to what is happening in europe because it very much so affects us and vice versa. >> well, if there were more effective problem solving in one place or the other, it would -- it would help everybody. >> good -- good succinct answer to that one. i'll ask you one last question, rick.

you heard our friend stephen moore from the "wall street journal" on a few minutes ago. a common refrain from conservatives that why would we have the central banks interfere more? they have been interfering for three years and look at the mess we're in. >> and i'm personally tired of the backward looking argument here. i mean, we are -- we're in a really messy financial and economic situation. somebody should try to do something. i mean, i think -- people don't think the fed is the best answer. they think it's the only answer because the politicians in washington can't agree, and the republicans who control the house have basically said no more stimulus of any kind unless it's tax cutting and that adds to the debt right away, so -- i mean, the fed doesn't want to do more quantitative easing. i think the fed would be quite happy if the politicians said hey, hand it over to us, we've got it but they are not doing it. >> good to see you. thank you, my friend. chief business economist at "u.s. news & world report." >> i thought you made a good point the other negotiate on "the daily show," the government cannot create the jobs, but they

can foster a better environment in which jobs can be created, and we know the president, right, been on a three-state midwest tour. >> right. >> touting jobs, jobs, jobs. we do also know we'll have a major policy speech coming up in a month, but you know what? there's been a lot of criticism that he has not focused on the unemployment sector within the minority population, and i'm going to talk to a u.s. congressman, congressman john lewis, who is live. i'm going to ask him if that criticism is fair, and also criticism is fair, and also where are the anananananannounc] this...is the network. a living, breathing intelligence that's helping drive the future of business. in here, inventory can be taught to learn. ♪ machines have a voice. ♪ medical history follows you. it's the at&t network -- a network of possibilities... committed to delivering the most advanced mobile broadband experience to help move business... forward. ♪

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we are 25 minutes away from the close of business there on wall street. all three indices are down. the dow jones industrial average down 472 points. we are coming upon that closing bell. we'll bring it to you live. meanwhile, let's talk jobs, jobs. today jobs. new details about this jobs plan that the president of the united states is set to unveil next

month. cnn's jessica yellin, our senior white house correspondent, will propose new legislation involving targeted tax cuts to employers to encourage them to hire new workers, also new jobs creating infrastructure investment, plus long-term help for those unemployed. today, in atlanta, georgia, people lining up very, very early, by the hundreds, for this jobs fair sponsored by the congressional black caucus, and several addressed the recent criticism that the president has not focused on minority unemployment. >> he had to give the money to wall street as opposed to giving it to jobs, and now that that has happened, where the rich have gotten richer and the poor have gotten poorer, now we see the backlash of that, such as what we see here today. >> i think the president has a lot on his hands. i understand a lot of people probably have that thing that since he's black he should be helping out his people, but just because he's president doesn't mean he can always be there. >> i think his priorities are to

make sure that we -- he tackles all the issues that are facing america, not just black america. >> well, joining me now from that jobs fair live, congressman john lewis, democrat from georgia. congressman lewis, nice to see you. you know, it's important to point out that the black caucus is holding all these fairs in major cities around the u.s. essentially with the goal of finding work, finding work for 10,000 people. can we be specific though? what kinds of jobs are we talking about here, congressman? >> we're talking about jobs, jobs, jobs, hundreds and thousands of people have been standing here all day today, since early this morning, trying to get a job. people want to work. we had one company made a commitment of 60 jobs. we need more than 60. we need thousands of jobs. here in atlanta, for people to

stand in a hot georgia sun all day in long lines is saying something about how desperate people are to work. people will take almost any job. >> certainly people are desperate. are we being more specific, talking manufacturing sector, health, education? what kind of jobs can you help offer up? >> well, we're trying to get jobs in all of these areas, health, education, manufacturing, transportation. georgia is the center of health and education. we have all these colleges and universities, research. i met young people, young students, four young men who graduated from college at the same time. one young lady who is working on her phd, but she cannot get a job. that is a shame. this is a disgrace. >> let me ask you this, congressman, because based upon her comments last night, also today, your colleague,

congresswoman maxine waters, she seems to be among the group saying, you know, that the president has been absent when it comes to black unemployment specifically. want to listen to her. she spoke today on cnn. >> we want the president to help everybody, just as he's helping the rural community. when he rode down in the past few days, he went to small towns in rural communities, and he went with a plan, and that plan was to invest money in those rural communities in order to develop jobs. we like that, and we want the real poor to be attended to, but we also want the urban poor to be attended to. that's all we're saying. >> i know you know this number, congressman lewis, 16%, that's african-american unemployment in the united states nationwide. it is seven points higher than the national average. did it give you pause at all when the president hopped on this bus, talked all about jobs, jobs, jobs, this week and went straight to the rural midwest?

>> well, we must convince the president and urge the president come to the large urban cities, not just in the northeast but also in the heart of the american south, but also visit the southwest where hundreds and thousands of our brown brothers and sisters, latinos, cannot find work. go and visit with native americans. we're all in the same boat, black, white, latino, asian america and native america. we're one people. we're one family. we're one house, and we want to work with this president to create jobs. >> congressman lewis, does it disappoint you, is that an appropriate word, that he went to the midwest and not to these urban centers? >> well, i'm not disappointed. i will not become disappointed because i'm always hopeful, always optimistic. our responsibility, our job

right now is to say to the president, to the leaders of congress, let's pass a comprehensive jobs bill to help all of our people. >> let's talk about that. >> jobs. >> according to our own reporting in terms of this jobs billing hearing that the jobs package that the president does plan to unveil next month, it will call for targeted tax cuts for employers, also new national infrastructure investments and long-term help for all these people who are out of work. given though what we have seen and heard from republicans, they won't approve any new spending so, sir, do you think that this legislation would even get a chance of getting passed? >> well, it is my hope and my prayer that the republican members of the house and the senate are listening to the people the same way that we are listening and they are hearing the same thing, to create jobs. i don't see how any politician, be it republican, democrat,

independent, conservative, liberal, progressive or whatever, cannot see the pain and hear the moan and groan of a desperate people. >> a lot of people in need of jobs, just in that city where you are. thank you, sir, and now to london and richard quest. >> brooke, we thank you for that. with just about 17 minutes to go of the trading session, the dow is now off more than 505 point, not the session lows, but it is well worth pointing out that at these levels, the session low is extreme ly dubious. just over 10,905, so we'll be watching that in the next 15 minutes. when we come back after this very short break, we're going to talk to bob lenza of "forbes" magazine and the fundamental question we need to ask bob is whether or not he believes the

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e welcome back to our special coverage. ali velshi reporting and myself as we count down towards the top of the hour, just 14 minutes or so away. the dow jones off more than 500 points, not the session lows, but it's clearly a pretty horrific day coming on after two weeks of such extreme volatility. bob lenza of "forbes" magazine joins me now live from new york. robert, as we look at what's happening rk i've read your article and you're quite clear

that you -- you basically said what morgan stanley said that a global recession is more likely. do you now believe that a recession in the u.s. and probably in parts of the eurozone is a racing certainty? >> yeah. no. i -- i would not say that anything is a virtual certainty, but if you look at the data, if you look at the numbers and add it up. germany is actually growing less than the united states. it's only growing at half of 1%. we were growing at 1.3% in the second quarter. the fed says they are going to keep interest rates at zero because they don't really expect the economy to recover during the next two years, two years. that's an amazing, amazing statement. then we've had the philadelphia manufacturing index today way down, a real shock. we had a couple of days ago the new york manufacturing numbers seriously down. we've got the housing still

down. >> right. >> and in a very serious way, and we don't have the promise -- what we really need, but, unfortunately, we're politically behind the eight ball, is we need an enormous stimulus program of say $200 billion, to put to work all these people from the construction trades and building and real estate that are out of work. that's what we really need, but i don't think republicans will ever go for it. >> right. >> i have one other idea. go ahead. >> before we get to your idea, your stimulus package has as much chance as daylight at night in london. >> right. >> however, that means it's the fed and the ecb that's going to have to come in with qe3 and there is a valid point that it hasn't been as effective as it might have been. >> i -- i don't think i agree with you. there may be qe3, but i think all it will do is push the price of gold up. the dollar down. i don't think it will -- the interest rates are so low, even

if they push the interest rates slightly lower, what good is that going to do? >> right. >> what kind of motivation is that for a business to go out and build more plants and hire people? i don't see it, unfortunately, sadly, i have to admit that, yeah. >> so let's talk about profitability of corporations. now u.s. corporations have been extremely profitable, largely on the back of their international operations. >> right. >> but should even there, and i don't want to be the harbinger of doom in every question that i ask. >> right. >> the downside, the risk must be to the downside now on profitability. >> it is, absolutely, absolutely. that's absolutely right. if europe is going -- is going south, all the american corporations that have huge operations there and sell many important products to europe, they are products to europe, they will suffer. so we have been at a peak of 14%

of greater return on revenues which has been in the past the peak and a signal that we can't go very much higher. >> i need ali velshi to listen to my question and more importantly to your answer because ali consistently manages to blame my side of the atlantic instead of ignoring his own side. >> i disagree with that. >> so you've put in right. where does the suggest responsibility -- who is going to have to get us out of this mess? >> i don't think we're going to get out of the mess. i think we'll have to muddle through because as a professor at harvard has pointed out, what we went through in 2008 and 2009 was such a seriou serious opera

the american economy that you can't recover fast. what happened to housing, it will take years to recover. nobody wants to accept this reality which is the result of hick studying 800 years of history. >> is this this is an interesti concept. what if we had to get used to a new reality that doesn't involve much growth whatsoever? and i know you write for regular folks. what does that mean reality mean where it's not about growth and the value in your house and salary, in the value of your stocks. what does that mean? >> you have to really think hard about how you're going to protect yourself. i think that's why you see investors just dumping their stocks, running in to cash so that whatever happens, and they don't know what's going to happen, i don't and neither of the two of you know either, we don't know how severe it's going to to be, but they want to make sure they've got enough money to get through the next two years and that's the most important

thing. but we must -- i wonder what you think of this, ali, because i heard you on jon stewart, i thought you were terrific. >> thanks. >> what if obama can come up with some tax benefit for small business where most of the jobs have been created so that each small business over a certain size would hire one person. one person for at least let's say the next lkxt three to five years. that would be millions of people. if they would get some benefit that would not cost them a lot of money in the search of improving their business and increasing their revenues -- >> and even conservatives agree on this point, that we all want to see some measure of growth in the economy. the most effective way even more than tax cuts is to somehow stimulate employment. i'd love it if we had an idea like that. bob, thanks very much. richard, back to you. >> all right. the most important thing i think

we heard in that part of the discussion is that ali and i are probably like everybody else, have got no idea what will be happening in two years. >> the three of us would be on a yacht in the mediterranean if we knew. bob says we'll be muddling through the mess. we'll be muddling through the closing bell. we're less than seven minutes away. join the have i got a surprise for you! a mouthwatering combination of ingredients... i know you're gonna love. [ barks ] yes, it's new beneful healthy fiesta. made with wholesome grains, real chicken, even accents of tomato and avocado. yeah! come on! [ barking ] gotta love the protein for muscles-- whoo-hoo! and omega-rich nutrition for that shiny coat. ever think healthy could taste so good? [ woman announcing ] new beneful healthy fiesta. another healthful, flavorful beneful.

breaking news. special edition of cnn. we're in new york, london and atlanta. and bob brought up a great point. ali velshi, you were teaching jon stewart a thing or two on all things economic on "the daily show." and i want to play just a little bit of sound because i thought this was a pretty interesting idea. you were talking jobs and essentially saying you wish congress had the same passion maybe will be the word when it comes to jobs as they did the whole bickering over the debt ceiling crisis. take a look to this. >> i wish that we had treated jobs the way we treated this debt creel which go was a bit of a manufactured crisis. jobs isn't. so what if we actually got everybody together and said there was some deadline to figure out how to create jobs. you can imagine the passion and energy that went into this debt

ceiling debate had gone into how do we actually get jobs created? >> brilliant. do you think it will fly? >> i wish there were this kind of deadline. we don't treat jobs that way and congress doesn't seem to operate on the basis of just getting it done. but the fact is takes hoodwink to suggest that the debt and deficit is more serious than the jobs crisis. if you employ people, they're not receiving zed, you're reducing deficits and ultimately moving on the way to growth. we have neither growth nor employment and as a result, we have no leadership. when you see a day like this in the market, you don't know what to turn to. richard and i are trying to find something to hang our hats on, but we can't. it doesn't mean it won't get better, just we have nothing to hang our hat on. >> the jobs and the growth, they're both two sides of the same coin. what bob said, it's so

unpalatable, but so true. this is a patient that's had le. items not going to suddenly run the new york marathon. so it's going to be slow and we're going to go through the mud. and until people are starting to be a little more 407bs about that, i'm sorry to be a downer always, every time i come on the program, i'm a downer. >> hey, do me a favor as we're watching the clock tick down on wall street, talk to me about markets in europe. they were pummeled today. >> oh, i'm just calling them up on my screen here. yeah, the dax was off 5.8%. the cac in paris was down 5.4%. the foo tse was down 4.4. barclays down 11%.

commodities down 10%. they were all heavy down. and if you look at the german market, you have bmw down 7%, tyson down 9% and of course the banks. what it tells me is this is a fundamental worry about the financial system and the wider economy because you're seeing industrials being clobbered. >> it's good sign by the way that all those numbers that richard just gave you, we're at 3.7%. it's nice that we didn't continue the trend of going worse. >> let's continue to the closing bell and then we'll continue the conversation.

what a day of trading. the numbers will begin to settle. the dow down, you can see -- let's go back to the big board and seat picture of tsee the pictures of the numbers. >> that's 100 points better. i i'm breathing a sigh of relief. we always seem to be getting worse at the close. which is what europe ended up largely doing which closed just off the lows which then makes me immediately move forward by four hours and think what happens when asian markets start. the fact is here the buyers didn't quite win, but they put up a hell of a faight. we were down more than 500 points at the low which was much earlier in the day. this is actually not nearly as bad as it looked for much of the day. >> richard quest, we've kept you

up late there in london. final thoughts and we'll let you go. >> some quick points on the dow. in the last 20 minutes, there was a buying spur which petered out. interesting to know whether that was just covering of financial transactions or whether there was some real buying coming into the market. it didn't have legs. sorry to say friday as i leave you now triple witching, high volatility. hold on to your hats. >> maybe we can have you back on if there's ever any good news. thank you so much live in london for us. ali, stick away. we'll continue this conversation. let's go to alilisoison kosik a new york stock exchange. ali said maybe a little bit of a sigh of relief since we've seen worse numbers just, what, a week ago. is that what they're feeling on the floor? >> oh, yeah. it definitely could have been much worse. we saw the dow down as much as 529 points and we saw the market

come back a little bit in the final few minutes of the trading day. everybody was thinking it will be an even bigger selloff. so sure that's good news. another bright spot, look at oil. oil prices down almost 7% at $81 a barrel. obviously we're not thrilled how we got there to see a selloff push oil prices lower, but there is a positive for you. if you're a consumer going to the gas station and filling up that car, we can hope friday see gas prices go even lower. gold hitting a record high of $1826. of course that flight to safety. everybody going on to something safer like gold and treasuries. >> thank you so much. stand by. ali velshi stand by. i want it on bring in rob reich. nice to have you back on the show. you've been witness to this, i've been in this seat, i've witnessed these wild swings.

you can translate this for us? what this means for americans specifically be they out of work, have a job, stockholders, not stockholders. what is it that we're seeing here? >> well, first of all, don't pay too much attention to a single day on the new york stock exchange. there is wild volatility. the general trend is unit fortunately downward and i think that reflects the market's concerns and it's a rational concern about the possibility of drifting into a double dip. you see there's no economic growth first half of this year and when you have 25 million americans who are either unemployed or underemployed, there's not enough aggregate demand because consumers are 70% about of this economy. >> robert reich, stand by. ali, are you listening? he says we should not pay so much close attention to what happens on one single day of trading. do you agree? >> i'd be happy to switch jobs with him. but unfortunately, we have to.

robert, you have published ten points which look to me like the recipe for a plan to get people back to work. and i can't go into all the detail, but exempting the first 20,000 of income, recreating the wps to get long term unemployed back to work, creating an infrastructure bank, letting distressed homeowners declare bankruptcy. on and on. does this kind of big idea have any traction amongst people who are make decisions about what to do right now? >> right now i think in washington there is kind of an obsession as you pointed out on jon stewart's show with deficit reduction which may be over the long term a very important thing to do. but right now, it's the opposite of what we ought to do. in fact austerity in europe and the united states are exactly the reverse of what is needed when an economy is operating as this economy is and europe at so far below productive capacity. >> let me jump in because i know exactly what ali is talking

about. you have these ten different components. let me ask you to be specific for people when haven't read your blog. if you have the president's ear, what recommendations would you make to the president so we can see jobs? >> well, number one, exempt the first $0,000 $20,000 of income payroll taxes for at least two years. that would put money directly into people's pockets and they would spend it. number two, have a civilian c conservation core for the long term unemployed. we have to get them back to work. and their work is critically important in terms of rebuilding america. and number three, an infrastructure bank that is sufficiently capitalized, $300 billion to $500 billion a year to deal with our crumbling infrastructure. roads, bridge, airport, schools,

all of which desperately need repairs. and with so much unemployment, it is absurd not to do this. and then the treasury bill, if i could just finish this, the t-bill is trading so low, we're seeing rock bottom 2% on a ten year t-bill. this is the time to borrow to make the contained kind of inved infrastructure that we need to make. >> this is the time, i know you know according to our reporting at cnn, that the president will be making this major policy speech. yes, he goes on vacation today. and specifically let me get this from our upnit this, this jobs package will cause for targeted tax cuts for employer, new infrastructure and investment and help for long term unemployed. what you've heard from republicans, republicans say they're not green lighting any new spending.

do you think that this legislation the president's about to propose doesn't even stand a chance of passing? >> well, it probably will not get through the house. the republicans will say no as they've said no all long. and the president, what he needs then to do is to bring it to the people. mobilize, generalize, organize. say this is the way back to jobs. i'm going to fight. i'll fight for my total agenda and if the republicans want to stick as to a lie that a small government generates more job, they can do that but i'll debate them on it. >> thank you so much. good to have you on the show. ally velshi, the man who never slee sleeps, thank you so much for weighing in. >> can we work together sometime

when it's not about the market? >> definitely. thank you so much. to our international viewer, thank you for being with us. we want to return you to max foster with connect the world. thank you for joining us. for our viewers in north america, straight ahead, it's been an investigation that has been going on for years. so why are we just now finding out about it? much more on the u.s. justice department's probe into the country's largest credit rating agency, the same agency that just downgraded america's debt. is this backlash? that's next.

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the dow, we don't want to lose

track of another important financial story. the u.s. justice department is investigating the country's largest credit rating agency, standard & poor's, s&p. that's the rating agency that recently cut this country's debt credit rating from aaa to aa plus. that happened just about two weeks ago. want to bring back in rick newman, the chief business koerpt with u.s. news and world report. so this investigation supposedly it began months ago, long before the downgrade of the u.s. credit rating. so even so, a lot of people see this investigation as pay back for the downgrade, will they not? >> yeah, obviously the timing is very provocative. but there really are two totally different things going on. it's important to remember that the ratings on these mortgage backed securities and derivatives of these mortgage backed securities that go back to 2005, 6, 7 and so on, these are been under investigation for a while.

basically ever since the financial crisis. these railroad one of the key elements in a long daisy chain of events that contributed to the collapse of the housing market, the subprime crisis and so on. the securities and exchange commission which is a different agency, not al affiliated with the justice department, has been looking into the problem that the ratings agencies give securities the highest rate which go was a mistake.. they were long. it's clear they were wrong. it's not clear that any of them committed a crime. so the government has been looking into this and it's a totally legitimate question. so it does seem this has just been leaked to the "new york times" recently and it's not related to it s&p's downgrading of the u.s. credit rating which happened a couple of weeks ago. >> i just want to go back because for people who are hearing this for the first time,

just make it crystal clear to me, i know you don't work at the doj, but from what we're learning that the article you can what specific questions is the justice department asking of the s&p and if in fact they find that in terms of maybe lowering some of the ratings, if it rings true, what could the department of justice do? >> the justice department it is worth putting out has not announced that they're doing this investigation, it has just leaked out. but the critical question is whether standard & poor's and any of the other rating agencies may have sort of falsely inflated their ratings of those securities back in 2006 and so on because they were being paid by the banks who were issuing the securities. that's basic let way tally the rating system works. it seems like a built-in conflict of interest because naturally anybody who is paying for you a rating want you to give them the highest rating you possibly can. so i think what they're trying to figure out is it's clear that they were wrong about the ratings. the question is did they

artificially inflate the railings so that these firms would say we'll keep paying you because you're giving everything a aaa rating. when that would be criminal. >> and i should point out cnn has confirmed this investigation, as well. but for an american just wondering what does this mean for me, can you help me troons late th translate that, why should we care? >> i don't think it means much for ordinary americans. the down grade in the u.s. credit rating does mean something and the next thing to watch in that regard is whether the two other big rating agencies moody's and fitch will join us and down grade the u.s. rating in the future. so far they said no. s&p could in the future raise it back up to aaa. i think everyone would like to see that. but that's not likely to happen anytime soon and i don't think it's likely to happen in anyway that makes it looks as if s&p was pressured or yielded to pressure from the government to

get that rating back up. so it could be a while before that happens if it does at all. >> back to the department of justice investigation into the s&p, if they find that some of he's potential allegations ring true, what could happen to s&p? what could they face? >> they could be prosecuted in some way. there could be fines. there could be one of those settlements that you get where the firm doesn't acknowledge any wrongdoing, but agrees to pay a big fine. so it looks as if the government actually got something for its trouble. i think what a lot of people would like to see is a new way of doing these ratings so that the rating agencies are not getting paid by the very firms that they're rating. and there are some regulations in the pipeline that might do that but it's just not clear how that will shake out yet. >> rick newman, thank you very much to explaining that. see you again. i want to turn our attention to some other stories today, including the jihadist death threat against david letterman. we'll tell you why the fbi is

now involved. plus this. >> i'm sad that he's gone. i miss him more and more every day. >> what a sad story. a brain-eating parasite has claimed its third victim, this time this 9-year-old boy died after swimming in a virginia river. we'll speak with his mother coming up.

welcome back. it's interesting and happening right now. rapid fire beginning with worry. worry about u.s. and global economies sent wall street into another downward spiral. the dow closing down 419 points. stocks were hit by bad news. first you had the morgan stanley

report issuing a dismal global economic forecast and u.s. housing and mafring came in worse than expected. also this, late might tv host david letterman is being targeted with a death threat from a jihadist website. letterman's being marked for death allegedly for comments he made about a dead al qaeda leader. here's what he said. >> so anyway, they picked a successor to osama bin laden and his name was kashmiri. well, guess what, he was blown up by an american drone. yeah. >> the group that monitors jihadist sites says it's urging its american followers on cut off letterman's tongue for his comments. prosecutors in new hampshire announcing an award for any information in the death of an 11-year-old girl. celina cass was last seen in her bedroom back on the night of july 25th. one week later, divers found her body in the connecticut river. no one has been arrested or

named as a suspect. it's unclear about today's reward will replace or supplement a $25,000 reward offered before her body was found. and this amazing story of honesty in the aftermath of japan's tsunami tragedy. safes filled with cash found in the debris and not just a few, 5700 of them containing nearly $30 million all around there. cleanup crews turned all the money over to police who tracked down the owners. they used any means possible going into hospitals, evacuation centers and examining change of address forms and they found most of them. was it a crazy fan, was a teenaged vandal? but a sign designating it justin bieber way. but it was stolen just two days after it was put up. the road was renamed when an 11-year-old girl became mayor

for a day and now her first order of business, rename a street after her singing idol. the real mayor says he's none too thrilled and ordereded a replacement sign stat. do you remember happy feet, the penguin who showed up on the shores of new zealand this summer all alone? well, he's expected to go home next month. scientists say this little guy is healthy and ready to travel all the way to antarctica and he'll have a little company. researchers will take him to the sub antarctic waters and release him and from there, they can monitor his movements with of course a gps tracker. two tough talking texans battling it out today on the campaign trail. plus which former obama administration official is now making a run for the senate? paul steinhauser has that coming up next. [ male announcer ] for sore muscles use new bengay cold therapy.

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let's go to washington now for your politics update. paul steinhauser standing by with the freshest news off the ticker. let's begin with the news on on ron paul and a former obama staffer. >> yeah, let's start with that. elizabeth warren is her name. she was in the new as lot last year. remember she was the economic adviser to barack obama who set up the consumer financial protection agency, which is a brand new agency set up last year. and it was not well loved by a lot of republicans. they would like to see it scrapped. last year she set up the agency, but she wasn't named to head it. she went back to harvard university and today she took the first formal steps to maybe launch a campaign and take on scott brown. she launched a website. there are seven other democrats in the race, but not a lot of national recognition. brown was pretty popular, he won

the special election. he has about $10 million in the bank. so that will be one heck of a senate race up there in massachusetts. >> you were at the state fair in iowa closely following the republican race for the white house. what's the latest today on that in. >> remember i had a twinkie log. no more say the fair. back here in d.c. now fp ron paul, last night he was in new hampshire. he opened up his campaign headquarters in the first primary state in the nation. he was talking about rick perry. and this is interesting because perry has been in the news for those comments about calling ben bernanke treasonous. ron paul saying wait a minute, i've been talking about the federal reserve for years saying we should scrap it, it should be audited. so ron paul may be trying to grab back some of that spotlight. and you want more ron paul, stay tuned. top of the hour, wolf blitzer has him on the situation room. >> we'll ask wolf about that.

paul, thank you so much. and let's talk here about the president of the united states heading off for a little vacation starting today. let's go to dan lcht uchtuthian. already at martha's vineyard. talk about the president i guess finally getting a little bit of r and r. >> and it's not without controversy. for weeks when word got out that the president was planning on on coming here the third summer now in a row, there have been those who have criticized the president both democrats and republicans saying that this should not be the place where he is right now, that he should be in washington calling lawmakers back to washington so they can deal with some of the tough issues out there affecting the economy, the president as you know working on his new jobs proposal. but the white house pushing back on that saying, listen, this is someone who needs to get out, get a little r and r, and when the president goes on vacation, it doesn't matter where he go, even here on martha's vineyard,

that he might be leaving the white house, but he's not leaving his job, he's always surrounded by his team of aides. he'll be getting all the briefings on national security, on foreign policy matters, as well. so he might be away from the physical structure of the white house, but the white house itself will be following him. >> let's go back to the double box because we were getting live pictures of the president leaving in air force one. there is the plane, i should say, at andrews air force base. and, dan, i know you mentioned he has a big policy speech. the president does. when he comes back into town next month that certainly his team will be working on while he is away. also making news, though, today the fact that the president was calling on syrian's president to step down. and one big question, though, is j did it take so long. >> right. and the administration has been asked this question now for several weeks if not months why the president did not call on assad to step down much sooner. and what the white house and

other administration officials have been saying is that they really want to get the allies behind them. they wanted to make sure that this was an international effort that there's in way that assad could say will is this is simply the u.s. acting alone. so that is what they point to as trying to essentially get the international ducks in a row. >> dan, thank you. that image almost looks fake, but i know it's real. enjoy it. >> it's very real. it's beautiful here. >> enjoy it. >> we're working. >> of course you are, very hard. speaking of boat, let's talk about yachts, jewelry, cash, even prostitutes. just some of the things alleg allegedly provided to university of miami football players. new developments today clearly rocking the sports world. ls of georgia,

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wall street plunges. the u.s. asks syria's president to step aside. and the latest on on the university of miami's athletic scandal. time to play reporter roulette. alison kosik, let's begin with you at the new york stock exchange. talk to me about the dow that we saw today taking a bit of a nose dive. not as bad as we've seen not too long ago. >> everyone wants to know what brought the bears on out today. investment bank morgan stanley saying that the u.s. and europe are going dangerously close with going into recession. dialing back its economic growth forecast for both the u.s. and europe for this year and next. that certainly stoked the fears of recession. also we have this litany of bad economic data for the u.s. jobless claims are back up above that 400,000 mark. home sales are down 3.5%. there's regional manufacturing index that came out that showed

contraction. we also found out consumer prices road. so we have all of this piling on one after another that really kept wall street in quite the funk today. >> i want to point to one specific issue that i think is just key to point out. they say the main reason for downgrade are recent policy errors in the u.s. and europe. that's interesting. >> yeah, it is. it's the same reason why standard & poor's downgrade the u.s. debt because we see what's happening in washington. and really what you see happening is babe thmaybe this street's way of holding the street to the fire, show some action and many we'll even rally once or twice. >> we look forward to it. thank you so much. next let's go to jill dougherty live at the u.s. state department. jill, big news came after months and months of blood shed in syria. the administration calling for the departure of al assad.

let's listen to hillary clinton. >> the people of syria deserve a government that respects their dignity, protects their rights, and lives up to their aspirations. assad is standing in their way. for the sake of the syrian people, the time has come for him to step aside and leave this transition to the syrians themselves. and that is what we will continue to work to achieve. >> here's the question, jill. is the administration backing up these words with deeds, with actions? >> they actually are. they call them the toughest and they are the toughest sanctions so far that the just has levied on syria. and what they're going to do is freeze syrian assets under u.s. control or jurisdiction. they're going to forbid any americans from having any business dealings with syria.

and then finally they'll ban any serial oil or petroleum products. so those are strong steps and they're hoping that other, mainly the europeans, will be following in their tracks and doing the same thing. >> but the major investment in syria doesn't come from us here in the united states, it comes from europe, from some of the persian gulf arabs. has the u.s. done the ground work to get those folks on board? >> they're trying to and they do feel that they're going to be hearing from other countries very soon and over the next few weeks, days, months. and you make a really interesting point because remember when you had the stand why now and why couldn't they do it before. that was really the key because the u.s. doesn't have a lot of leverage. very little of the business of syria is here in the united states. we have almost no syrian oil. it's miniscule. so that's why you couldn't really do it until you got other countries in this kind of

coalition to do it. >> makes sense. jill dougherty, thank you very much. and next on reporter roulette, the scandal we talked about this yesterday, this is rocking the university of miami. talking about allegations of extravagant gifts and cars and cash and even prostitutes provided to some of these football players. david mattingly is digging into some of these details for us in coral gables, florida. >> reporter: everyone here at the university of miami completely taken aback by the shear scope of these allegations from the former booster neva this. shapiro who claims he had dealings breaking rules with players from a period of 2002 to 2010. shapiro saying this involved over 70 players, a dozen of those players still on the hurricane team. the hurricanes have a new coach this year, al golden, who says he came here to concentrate on football and to take this program back into national championship form. but now he's having to answer a lot of questions for problems that happened before he got

here. >> i think if anything, it's going to bring us closer together. again, 90% of the guys have nothing to do with this as it happened in the past, so for the most part, inside here, we're moving forward. nobody wants to get to the truth quicker than i do and the way you do that is you cooperate and you get your young people to cooperate and if they did make a mistake, let's be honest and open and let's move forward. >> reporter: university of miami president saying that she wants the truth to be pursued and to follow that truth wherever it might take them. the athletic director for the university of miami also saying that tough times are ahead for the university. but at this point, it's the n skrchlt a achl caa that will have the final word. already they're saying if this is true, then they may have to seriously look at changing the rules about how universities deal with these boosters. >> what a story.

appreciate it. coming up next, this will be a tough one. my interview with a virginia mother who just most her 9-year-old son, the nation's third victim of this deadly brain-eating a me about ing brain-eating amoeba. what you need to know if b. this parasite. ♪ this is our pool. ♪ our fireworks. ♪ and our slip and slide. you have your idea of summer fun, and we have ours. now during the summer event get an exceptionally engineered mercedes-benz for an exceptional price. but hurry, this offer ends august 31st. it's schwab at your fingertips wherever, whenever you want. one log in lets you monitor all of your balances and transfer between accounts, so your money can move as fast as you do.

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it's a better policy that gets you a better car. call... or visit one of our local offices today, and we'll provide the coverage you need at the right price. liberty mutual auto insurance -- responsibility. what's your policy? i love you. those with were a 9-year-old's final words to his mother just before he died. his name is christian strickland. he lived in virginia, one of three actually to die recently

after suffering this rare infection from this water-born amoeba. it climbs up into the person's nose, destroys the brain when people swim in warm fresh water. christian went to fishing camp and was in the water a lot. he was perfectly normal when he got back bei, but later started complaining of a headache. he died just a couple days la r later. christian's mother is on the phone with me from virginia. amber, my sincerest condolences to you. and i understand you wanted to come on cnn to get the world out to parents that this can happen. let's just begin -- >> well, i know a lot of people watch cnn and i thought it was important to get my story out. >> we appreciate it. christian was your son's name.

explain to me, so he goes to camp, he comes back, you think everything's fine and he take as nap and everything changes. describe what happened. >> well, christian at first had been complaining that his head hurt. and he had been on a medication for adhd that the side effects were headache, so that's all i assumed it was. so i put him in the bathtub to soak his head, make it feel better. and then gave him an aleve and it told me it felt better. next morning, he wakeses up, he could barely talk. it was like his gentlemjaw was shut. his tongue was swollen when he was talking. and i was worried, but not as worried as when i tried to get him to take him to the doctor. he looked at me frightenly like i was going to hurt him. i was trying to lay him down and he just kept sitting up, sitting

up. and staring at my face like he was trying to figure out who i was. and i got him to the doctor and they took one look at him -- >> he took him to the pediatrician? >> i took him to the er. >> doctors gave him a spinal tap and the doctor looks at you and -- >> the fluid was cloudy right from the get-go. but there was no bacteria in it. >> so then what did they tell you? >> so that was the confusing part. he was showing all the symptoms of back teterial meningitis exc for the bacteria in the spinal fluid. so they were confused. we had him on so many antibiotics, i wondered if it was going to kill him just for being on so much medicine. they treated him for west nile, everything you could possibly think of, every sickness, everything.

h herpies sim bleymplesymplex, ev. >> he's in a hospital room. how many days was he in the hospital any understand at one point you were there and he's screaming for you. >> right. i had left to get the car, my husband was flying in. when i left, i shot a video that i haven't posted because it's kind of personal. the last time that he had really talked, like he saw somebody, you know, he said i see you. and that was the last normal thing he said. and then i came back and he was screaming. and then that's when the doctor explained that he had encephalitis. againing git tis inin ining sen infection of the brain itself. so his brain started to swell. and when they did an mri, they

noticed that every crevice in his brain was filled with -- i can't even positithink of the w. >> pus. it was filled with pus basically. >> so these in this hospital ram, how -- >> he went in on tuesday at 4:00. they took him to pediatric icu. and by thursday morning at like 2:00 in the morning, he was brain dead. and we tried to donate his organs. she said he was more special than we even knew because of how many, you know -- it's rare to find a b positive donor his size. >> but you wanted to have a legacy for your son. you can't donate hisorgans. i understand his final words to you were i love you? >> it was crazy.

he was in so much pain. and out of no wrrhere, he said, mommy, i said, yeah, buddy, and he said i love you. those were his last words that i heard come out of my baby's mouth. and i'll never be able to touch him or hold him and he was so amazing. i still thank god even though he took him back, i still thank god every day that he brought me christian because he changed my life in so many ways. >> nine years of age. he was an adorable little boy. we're looking at pictures of him. amber strickland again, my thoughts and prayers to you, to your family, i thank you for coming on. because i think a lot of parents perhaps never heard of this. amber, thank you. >> yeah, you know, and especially, too, all those

projects, this is our main thing. cherish your children because you don't know when tomorrow -- i mean, my son was just playing video games, had been inside for four days. you know, there was -- i had no idea. so cherish your children because you never know when they're going to be gone. all those projects that you haven't done that you're promising that you're going on do, do them. because those are the things that mean so much to them and those are the things that you'll regret the most. >> amber, again, condolences. thank you so much for coming on. if you're a participanparent an wondering if there's anything i can do, don't swim in water untreated water especially during high temperatures, try and hold your nose shut or use nose clips when you're swimming in warm fresh water. and avoid digging or skiritirrip the sediment. and although infections we're told are very, very rare, there

is no treatment for this fatal amoeba yet. coming up, a jihadist website issues a death threat against late night host david letterman. now the fbi is joined in that investigation. we are on the case today with casey jordan next. but with 24-hour zyrtec®, i get prescription strength relief from my worst allergy symptoms. so lily and i are back on the road again. with zyrtec® i can love the air®. [ martin luther king jr. ] i still have a dream that one day on the red hills of georgia, the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood. i have a dream today! [ male announcer ] chevrolet is honored to celebrate the unveiling of the washington, d.c., martin luther king jr. memorial. take your seat at the table on august 28th.

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a couple michts minutes away from the situation room. let's check in with wolf. a little birdie tells me you have ron paul on the show today. >> ron paul came in second in the iowa straw poll. some are suggesting he's not getting equal treatment with the other republican candidates running for the republican presidential nomination and i'll

ask him if he thinks that the national news media has been pair to him, but we'll also get into some of the substantive issues. he differentiates with all of the other republican canned dads, includad , including the president of united states, when it comes to bringing the american troops home, from germany, from south core re, a he wants all those back in the united states immediately.re, a he wants all back in the united states immediately. i'm also going to ask him if he thinks iran does or does not threaten the united states. also nikki haley, the governor of south carolina, she'll be here in "the situation room." she's a rising star in the gop. we'll talk to her, as well. >> teenagers on facebook, do

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for followers to actually cut his tongue out here in the united states. let's listen to what letterman said that has them calling for his death. >> so they picked a successor to osama bin laden and his name was kashmiri. guess what, he was blown up by an american drone. >> so that's it. that's what he said. casey, i know that there are reports that the fbi is jumping on this. what do they look for and what can they really do? >> well, the most important thing to take away from this is that they're on toll of the i intelligence. granted everybody was very celebratory around that time because it was early june just after bin laden had been tikill. and now the threat is coming out and we're unclear as to whether they've known about it for two months or are just making it known to the public. i have a feeling they've been

monitoring this for the first two months and letterman has known about it, nothing has happened, but perhaps precautionary measures have been taken because i don't remember letterman making anymore jokes about the jihad since june. >> interesting. do you think, though, it's gotten all kinds of traction because it involves a celebrity, that there were lots of threats out there? >> an alias posted the threat, had over 1200 posts. and he's just one of thousands of people who are posting. so it was a lot of work to actually monitor these site, many of them in different languages, to take away the threats. but this one was serious enough that the fbi did an investigation and is monitoring the situation. ingletter man takes it seriously, too. i don't think you'll hear anymore jokes on this topic. it just isn't worth it because

there are people out there who will respond to that call to action. >> lesson learned. second case. parents, let's talk about facebook here. so this judge has actually decided with a group of high school girls who had been punished by their principal for these lewd pictures they posted on facebook. no question the pictures were say -- let's just say we're not putting them on this show. but why did the judge take the side of the girls? >> well, they won their free speech complaint because these photos were taken at a private home after school hours in fact during the summer break. they ended up getting posted on facebook. keep in mind these girls are 15 and 16 years old. they weren't pornographic, they were wearing lingerie and pajamas, they simply -- it's the actions that they photographed that were extremely lewd. but it's not really an issue of

how lewd or obscene or pornographic the photos really were. the issue was it had nothing to do with school activities. the principal was tipped off to the photos and suspend the girls for extracurricular activities for one year. but their attitude is anything we do off of school time is our business, it doesn't interfere with skoom chool at all. the judge agreed, your preach speech is protected even if you're a teen and lewd as long as you're not did his ruptisrup learning process. >> do you think the judge had ruled the same way if it happened on campus? >> i have to think it would have gone a different direction. the whole issue is does it disrupt the learning process. what i want to know is do kids look at facebook during the school day, are they given access to the internet, do they have their cell phones with them so will that they can be saying, oh, look,